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WTO Authorizes $1 Billion in Retaliatory Tariffs Against COOL

The World Trade Organization (WTO) has authorized Canada and Mexico to charge the U.S. $1 billion in retaliatory tariffs for country-of-origin labeling (COOL) on meat.

Last spring, WTO rejected a U.S. appeal of its decision that COOL unfairly discriminates against meat imports and gives the advantage to domestic meat products.

COOL, which went into effect for meat in 2013, requires that packaging indicate the country, or countries, where animals were born, raised and slaughtered.

Canada and Mexico initially sought more than $3 billion in retaliatory tariffs. The United States Trade Representative (USTR) said this was a dramatic overestimation of damages and argued that the WTO set allowable tariffs at no more than $43.22 million and $47.55 million for Canada and Mexico, respectively.

WTO decided on Monday that Canada could impose $780 million in retaliatory tariffs for COOL, and Mexico could impose $228 million.

Bill Bullard, CEO for R-CALF USA, called the decision “utterly absurd,” arguing that those numbers can’t possibly represent the losses those countries are facing.

Other industry groups, such as the National Association of State Departments of Agriculture, the National Grain and Feed Association, the National Pork Producers Council, and the National Chicken Council, urged Congress to repeal COOL immediately.

“It is important that the United States adhere to its WTO obligations and set an example for the rest of the world, particularly as it pursues significant new trade accords under the Trans Pacific Partnership and other initiatives,” said Randy Gordon, president of the National Grain and Feed Association. “A full repeal of COOL is the only policy option available that unquestionably would prevent imposition of sanctions and the economic damage that would result.”

Over the summer, many in Congress called for a full repeal of COOL for beef, pork and chicken, and the House of Representatives passed a bill which would do just that. Others, such as Rep. Earl Blumenauer (D-OR), said action had to wait at least until WTO had approved tariff levels. Sen. Debbie Stabenow (D-MI) offered up a bill to make COOL on meat voluntary.

POLITICO reports that a rider to fix COOL could be included in the omnibus bill expected later this week.

“The WTO has warned us multiple times, and Congress has ignored the warning,” said Sen. Pat Roberts (R-KS), chairman of the Senate Committee on Agriculture, Nutrition and Forestry, in reaction to WTO’s decision Monday. “This is no longer a warning. Retaliation is real. Now more than ever, we need to repeal COOL.”

But R-CALF’s Bullard said that Congress still shouldn’t repeal COOL or make it voluntary.

“Instead, Congress should direct our U.S. Trade Ambassador to negotiate a diplomatic solution to Canada’s and Mexico’s complaints,” he said. “Congress should also direct the U.S. Agriculture Secretary to immediately begin promulgating new COOL rules to close some of the loopholes identified in the WTO dispute that are effectively limiting the effectiveness of COOL.”